India Globalisation Essay

1. India
Economics
Case
Study
Summary
Undertake
a
case
study
of
the
influence
of
globalisa;on
on
an
economy
other
than
Australia,
including
an
evalua;on
of
the
strategies
used
to
promote
economic
growth
and
development
in
this
economy.
India
is
an
emerging
economy,
with
consistent
economic
growth
–
out
of
the
BRICs
India
is
the
only
country
with
growing
growth
forecasted
in
2015
and
2016.
India
has
the
world’s
second
largest
labour
force
and
populaCon
with
over
1.2
Billion
people.
Located
in
south
Asia,
it
has
a
GDP
of
over
USD$1.8
trillion.
GlobalisaCon
refers
to
increased
integraCon
between
economies
and
countries
of
the
world
through
the
increased
impact
and
transmission
of
global
trade,
finance,
labour,
investment,
and
technology
on
economic
growth,
acCvity
and
development.
Economic
growth
Economic
growth
is
the
increase
in
market
value
of
the
goods
and
services
produced
by
an
economy
over
Cme,
generally
measured
as
annual
percentage
change
of
an
economy’s
output
or
GDP
(Gross
DomesCc
Product).
India’s
economic
growth
was
5%
in
2013.
In
2010,
it
had
an
immense
rebound
from
the
GFC
with
over
10%
growth.
HighlighCng,
India’s
emergence
in
the
world
economy
as
a
driver
of
growth.
India’s
growth
has
been
facilitated
through
improvements
in
aggregate
supply
and
demand,
by
accommodaCng
globalisaCon.
Aggregate
supply
–
Improvement
in
AS
has
been
catalysed
since
1991
by
a
Balance
of
Payments
crisis,
which
pushed
India
near
bankruptcy.
In
return
for
an
IMF
bailout,
the
rupee
was
made
converCble,
tariffs
were
lowered
and
economic
reforms
were
forced
upon
India.
Such
reforms
have
invited
compeCCon,
liberalised
trade,
and
invited
private
sector
investment.
The
major
microeconomic
reform
in
India
to
aid
globalisaCon
was
the
aboliCon
of
the
Licence
Raj
in
1991
-­‐
the
elaborate
system
of
licences
and
regulaCons
required
between
1947
and
1990
for
businesses.
This
deregulated
private
sector,
reducing
the
Cme
lag
of
the
Indian
economy
improving
domesCc
efficiency,
thereby
improving
aggregate
supply.
In
addiCon,
it
made
the
Indian
market
more
accessible
for
TNC’s
such
as
Microsob,
Nokia,
and
CiCgroup,
who
brought
modern
capital
technologies,
further
improving
aggregate
supply,
creaCng
stable
economic
growth.
Prior
to
this
growth
was
low
and
volaCle,
referred
to
as
the
Hindu
rate
of
growth.
In
1991
economic
growth
was
1%,
since
then
it
has
remained
over
3.8%.

2. Aggregate
demand
(AD
=
C
+
I
+
G
+
X
–
M)
–
Stable
growth,
a
large
labour
force,
and
increased
acceptance
of
foreign
investment
further
afracted
TNC’s
to
India
thought
he
21st
century.
This
has
increased
disposable
incomes
of
Indian
ciCzens,
with
exponenCal
growth
in
GNI
per
capita
since
1990
–
aber
doubling
through
1990’s,
it
doubled
again
by
2009,
currently
at
5350PPP.
Thereby
the
investment
and
consumpCon
components
of
AD
have
increased
due
to
globalisaCon.
Furthermore,
the
export
component
of
AD
has
also
increased
due
to
trade
liberalisaCon
and
the
pursuit
of
free
trade
through
agreements
such
the
ASEAN–India
Free
Trade
Area,
becoming
acCve
in
2010,
which
saw
trade
between
the
two
groups
grow
over
37%.
This
has
allowed
India
to
contribute
to
the
global
economy,
with
the
transmission
of
its
growth
across
borders.
Since
1991,
India’s
economic
growth
maps
the
Gross
World
Product
(GWP)
growth
paferns,
highlighCng
India’s
influence
as
a
larger
economy
in
the
world,
as
globalisaCon
increases
the
Indian
economy’s
size.
Finally,
India
is
embracing
globalisaCon
through
encouraging
entrepreneurial
behaviour.
There
are
now
8
Indian
headquartered
TNC’s
in
the
Fortune
Global
500
list,
significantly
contribuCng
to
GWP
growth.
Monetary
changes
have
occurred
due
to
globalisaCon,
with
increased
deregulaCon,
enabling
converCbility
(prior
to
1991,
the
Indian
rupee
could
not
be
converted),
enabling
increased
financial
flows.
Since
the
90s
the
value
of
the
Indian
rupee
has
fallen
by
almost
75%,
creaCng
a
persistent
current
account
deficit
in
India,
placing
downward
pressure
on
export
prices,
making
exports
more
compeCCve,
but
imports
more
expensive.
However,
due
to
the
large
size
and
growth
of
the
Indian
economy,
internal
stability
is
sCll
a
larger
concern,
rather
than
external.
Economic
development
and
Employment/unemployment
Economic
development
is
improvement
in
the
qualitaCve
aspects
of
an
economy,
whereas
economic
growth
is
enCrely
quanCtaCve.
Development
comes
from
infrastructure
improvements
and
a
transiCon
from
an
agricultural
to
service
based
economy.
GlobalisaCon’s
impacts
on
India’s
development
come
through
TNC’s.
TNC’s
improve
infrastructure
through
foreign
direct
investment,
in
which
India
is
ranked
second,
by
building
roads
and
sewage
faciliCes
for
their
plants.
Furthermore,
they
provide
modern
technologies
for
workers.
From
2010
to
2013
internet
users
doubled.
However,
electricity
grids
in
India
have

3. twice
daily
blackouts
in
most
urban
areas.
GlobalisaCon
has
brought
luxuries
to
India,
but
has
leb
behind
India’s
main
development
barriers.
Agriculture
employment
in
India
is
more
than
twice
the
size
of
services.
A
large
proporCon
of
agricultural
employment
will
always
remain
in
India
as
they
have
a
large
populaCon
to
feed.
However,
TNC’s
have
brought
growth
to
India’s
service
industries,
mainly
telecommunicaCons
and
IT.
Thereby
aiding
India’s
economic
development.
GlobalisaCon
has
helped
reduce
unemployment
in
India
to
just
over
5%
in
2013.
GlobalisaCon
has
also
changed
the
structure
of
employment.
From
1983
to
2005,
employment
in
agriculture
decreased
by
over
12%,
manufacturing
increased
by
5%,
and
services
increased
by
over
7%.
A
downside
of
globalisaCon
for
India
is
the
brain
drain
effect.
India
is
among
the
countries
which
loses
the
most
highly-­‐skilled
workers
overseas.
GlobalisaCon
has
also
formed
a
trend
of
rural
to
urban
migraCon
in
India,
saturaCng
ciCes.
Distribu9on
of
income
and
wealth,
and
income
India's
Gini
coefficient,
has
increased
from
0.31
in
1994
to
0.34,
indicaCng
that
the
income
gap
has
widened.
Inequality
should
always
exist
as
it
incenCvises
people
to
work
harder,
however,
in
2011,
the
top
10%
of
wage
earners
made
12
Cmes
more
than
the
bofom
10%,
double
the
raCo
of
six
to
one
in
the
90s,
TNC’s
are
giving
the
rich
more
business,
and
exploiCng
the
poor,
which
is
the
main
negaCve
of
globalisaCon
for
India.
Quality
of
life
indicators
HDI,
which
combines
life
expectancy,
educaCon,
and
GNI
per
capita,
for
India
has
improved
from
0.48
in
2000
to
0.59
in
2013.
IndicaCng
that
globalisaCon
has
posiCvely
impacted
on
social
well-­‐being
in
India.
India’s
Gender
Inequality
Index,
evaluated
by
the
UN
at
0.69
in
1995
decreased
to
0.59
in
2010.
HighlighCng
that
gender
equality
has
improved
in
India
with
globalisaCon,
helping
India
to
develop
as
the
female
half
of
the
populaCon
becomes
more
involved
in
the
economy.
Finally,
almost
a
quarter
of
India’s
populaCon
lived
under
the
poverty
line
of
$1.25
per
day
in
2011.
Yet,
this
is
an
immense
improvement
from
1994
where
a
shocking
49%
lived
below
the

4. line,
indicaCng
that
globalisaCon
has
had
a
posiCve
impact
on
the
Indian
economy.
Although
TNC’s
may
be
exploiCng
these
workers,
they
are
at
least
above
the
poverty
line,
which
is
an
improvement.
Environmental
sustainability
ProtecCng
and
sustaining
the
natural
environment
is
important,
as
it
is
the
largest
source
of
natural
resources
for
producCon,
and
helps
keep
workers
healthy
and
efficient.
The
trends
of
urbanisaCon
and
industrialisaCon
in
India,
catalysed
by
globalisaCon,
have
led
to
an
increase
in
water
and
air
polluCon,
due
to
market
failure
of
negaCve
externaliCes,
producCon
methods
which
deplete
the
environment
are
likely
to
conCnue
with
globalisaCons.
Conclusion
GlobalisaCon
has
posiCves
and
negaCves
for
India.
It
has
increased
economic
prosperity
and
development,
libing
a
large
proporCon
of
its
people
out
of
poverty,
however,
globalisaCon
has
led
to
a
brain
drain
and
exploitaCon
of
the
poor,
widening
India’s
income
gap.
Yet
the
posiCves
clearly
outweigh
the
negaCves,
and
globalisaCon
will
be
a
trend
that
conCnues
into
the
future
for
India,
where
the
main
challenge
will
be
sustainable
development.
Find
sta;s;cs
pre
and
post
license
raj
Summary
Indicator Pre
License
Raj
(1990) Post
License
Raj
(1995)
Economic
Growth
(%) 6.1 6.4
HDI 0.43 0.46
Popula8on
&
Growth
rate 868.9Mil
&
2.04% 1042.3Mil
&
1.67%
GINI 31.88
(1988) 30.82
(1994)
GNI
per
capita
PPP $1160 $1520
Absolute
Poverty 53.6%
(1988) 49.4%
of
populaCon
(1994)
GDP
($US) $22.5
Trillion $30.6
Trillion

5. India
is
an
emerging
economy,
with
consistent
economic
growth
–
out
of
the
BRICs
India
is
the
only
country
with
increasing
growth
forecasted
in
2015
and
2016.
India
has
the
world’s
second
largest
labour
force
and
populaCon
with
over
1.2
Billion
people.
Located
in
south
Asia,
it
has
a
GDP
of
over
USD$1.8
trillion.
GlobalisaCon
refers
to
increased
integraCon
between
economies
and
countries
of
the
world
through
the
increased
impact
and
transmission
of
global
trade,
finance,
labour,
investment,
and
technology
on
economic
growth,
acCvity
and
development.
Economic
growth
Economic
growth
is
the
increase
in
market
value
of
the
goods
and
services
produced
by
an
economy
over
Cme,
generally
measured
as
annual
percentage
change
of
an
economy’s
output
or
GDP
(Gross
DomesCc
Product).
6.9%
in
2013,
2010
rebound
from
the
GFC
over
10%
growth.
Growth
due
to
improvements
aggregate
supply
and
demand
by
accommodaCng
globalisaCon.
Aggregate
supply
1991
Balance
of
Payments
crisis,
IMF
bailout
–
rupee
converCble,
tariffs
lowered,
reforms
forced
-­‐
invited
compeCCon,
liberalised
trade,
invited
private
sector
investment.
AboliCon
of
the
Licence
Raj
in
1991
-­‐
the
elaborate
system
of
licences
and
regulaCons
required
between
1947
and
1990
for
businesses
-­‐
deregulated
private
sector
improving
efficiency,
AS.
More
accessible
for
TNC’s
-­‐
modern
capital
technologies,
further
improving
AS,
stable
economic
growth
–
prior
=
Hindu
rate
of
growth
(low
and
volaCle)
1991
economic
growth
1%,
since
remained
over
3.8%.
Aggregate
demand
(AD
=
C
+
I
+
G
+
X
–
M)
Growth,
a
large
labour
force,
acceptance
of
foreign
investment
-­‐
TNC’s
to
India
though
21st
century
-­‐
increased
disposable
incomes
GNI
per
capita
doubling
1990’s,
doubled
again
by
2009,
currently
5350PPP
-­‐
investment
consumpCon
AD
increased
due
to
globalisaCon.
Export
AD
increased
due
to
trade
liberalisaCon
pursuit
of
free
trade
-­‐
ASEAN–India
Free
Trade
Area
2010
trade
two
groups
grow
over
37%.
Transmission
of
growth
across
borders.
Since
1991
growth
maps
Gross
World
Product
(GWP).
Encouraging
entrepreneurial
behaviour.
8
Indian
headquartered
TNC’s
Fortune
Global
500.
Monetary
changes
ConverCbility.
Since
90s
rupee
fallen
almost
75%
-­‐
persistent
current
account
deficit,
downward
pressure
on
export
prices,
making
exports
more
compeCCve,
but
imports
more
expensive,
internal
stability
larger
concern,
rather
than
external.
Economic
development
and
Employment/unemployment
Economic
development
is
improvement
in
the
qualitaCve
aspects
of
an
economy,
whereas
economic
growth
is
enCrely
quanCtaCve.
Development
comes
from
infrastructure
improvements
and
a
transiCon
from
an
agricultural
to
service
based
economy.
GlobalisaCon’s
impacts
through
TNC’s,
improve
infrastructure
through
foreign
direct
investment
(India
second)
-­‐
roads
and
sewage
faciliCes
for
plants
&
modern
technologies
-­‐
2010
to
2013
internet
users
doubled,
electricity
grids
in
India
have
twice
daily
blackouts
in
most
urban
areas.
Agriculture
employment
more
than
twice
services
(large
populaCon
to
feed).
TNC’s
growth
to

6. India’s
service
industries
-­‐
telecommunicaCons
and
IT
-­‐
reduce
unemployment
just
over
5%
in
2013.
Changed
structure,
1983
to
2005
agriculture
decreased
over
12%,
manufacturing
increased
5%,
and
services
increased
over
7%.
The
brain
drain
effect
among
countries
loses
the
most
highly-­‐skilled
workers
overseas
&
rural
to
urban
migraCon,
saturaCng
ciCes.
DistribuCon
of
income
and
wealth,
and
income
Gini
coefficient
0.31
1994
to
0.34.
2011,
top
10%
wage
12
Cmes
more
than
bofom
10%
-­‐
double
raCo
six
to
one
in
90s
-­‐
TNC’s
are
giving
the
rich
more
business,
exploiCng
the
poor.
Quality
of
life
indicators
HDI
-­‐
life
expectancy,
educaCon,
GNI
per
capita.
0.48
2000
to
0.59
2013.
Gender
Inequality
Index
UN
0.69
1995
0.59
2010
(more
equality).
Almost
quarter
populaCon
under
poverty
line
$1.25
2011,
globalisaCon
creaCng
improvement
1994
49%.
Environmental
sustainability
Largest
source
natural
resources
producCon,
workers
healthy
and
efficient,
intergeneraConal
equality.
UrbanisaCon
and
industrialisaCon,
catalysed
by
globalisaCon,
increase
water
and
air
polluCon.
Market
failure
of
negaCve
externaliCes
-­‐
producCon
methods
deplete
environment
conCnue
with
globalisaCons.
GlobalisaCon
has
posiCves
and
negaCves
for
India.
It
has
increased
economic
prosperity
and
development,
libing
a
large
proporCon
of
its
people
out
of
poverty,
however,
globalisaCon
has
led
to
a
brain
drain
and
exploitaCon
of
the
poor,
widening
India’s
income
gap.
Yet
the
posiCves
clearly
outweigh
the
negaCves,
and
globalisaCon
will
be
a
trend
that
conCnues
into
the
future
for
India,
where
the
main
challenge
will
be
sustainable
development.
Indicator Pre
License
Raj
(1990) Post
License
Raj
(1995)
Economic
Growth
(%) 6.1 6.4
HDI 0.43 0.46
Popula8on
&
Growth
rate 868.9Mil
&
2.04% 1042.3Mil
&
1.67%
GINI 31.88
(1988) 30.82
(1994)
GNI
per
capita
PPP $1160 $1520
Absolute
Poverty 53.6%
(1988) 49.4%
of
populaCon
(1994)
GDP
($US) $22.5
Trillion $30.6
Trillion